SFB 303 Discussion Paper No. A-480
Author: Schmidt, Klaus M. Title: Incomplete Contracts and Privatization
Abstract: The paper offers a selective survey on the incomplete
contracts approach to privatization. Furthermore, a simple model of privatization
to an owner-manager is developed in which different allocations of ownership
rights lead to different allocations of inside information about the
firm which in turn affect allocative and productive efficiency. In this
model, privatization is a commitment device of the government to credibly
reward the manager for a successful cost reduction and to harden his
Keywords: Incomplete Contracts, Privatization, Regulation,
Soft Budget Constraint.
JEL-Classification-Number: L33, L50.
Creation-Date: March 1995
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